Price cuts could save NHS £1bn

The chancellor claimed a victory yesterday in saving a third of a billion pounds a year on the cost of branded drugs for the NHS and the total savings on drugs could be three times that. According to the pre-budget report, the NHS will save £1bn in tax year 2005-2006 by introducing price cuts for drugs.

Although £370m a year from cutting the price of branded medicines, which are the most expensive, was known, it appears that twice as much will be made from new agreements with generic manufacturers, who produce drugs when they have lost their patent and are cheaper.

This side of the industry has had its image sullied by a Serious Fraud Office investigation into alleged cartel activity and the NHS is seeking the return of money in the civil courts.

The government has promised to put savings from drug price cuts into more doctors and nurses.